Any currency war could put India in a tough spot
Reuters Market Eye - Finance Minister P. Chidambaram says premature to say Japan's move to weaken yen constitutes a currency war, but urged Asian countries who are looking to stem volatile inflows to avoid depreciations of their currencies.
Chidambaram's comments must be seen in the context that India needs large inflows and a stronger rupee to narrow the current account deficit and to curb inflation.
Despite QE3-led strong inflows into domestic stocks, the rupee actually saw mild depreciation in 2012, with the central bank intervening to prop up the currency.
A currency war could put India in a tough spot, not following other countries in depreciating its currency could make its exports less competitive.
But the country also can't afford a weaker currency at a time when confidence in the rupee is not particularly strong because of the twin deficits.
(Reporting by Subhadip Sircar)
- Tweet this
- Share this
- Digg this
- Govt considers ban on e-cigarettes, sale of single smokes
- Islamic State fighters kill 220 Iraqis from tribe that opposed them
- Sensex surges 500 points on BOJ easing, L&T gains
- PRECIOUS-Gold, silver tumble to four-year lows as dollar rallies
- Japan's central bank shocks markets with more easing as inflation slows
Shares Hit Record
The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro. Full Article
China's shadow banking sector growing rapidly, third largest in world - FSB. Full Article